Faq

Our Information Request Form states the information to be provided to the Buyer such as:

● Location of Books and Records
● Your Accountant
● List of Creditors
● Company Authentication Code

Yes. If a business goes through the liquidation process, the conduct of the director(s) over the preceding three years is investigated as a matter of course. So as such a Director has a duty to engage with any liquidator or the Insolvency Service.

If you are a director of a company, you have both a statutory and common law duty to have regard to the interests of the creditors of the Company. This can mean that a Director, either by certain acts or omissions, can be held liable for the liabilities of a Company. This is a complex area of law, and if you are in any doubt, you should seek independent legal advice. The following is a non-exhaustive list of examples:

● Misappropriation of company funds – such as removing cash for non-company purposes
● Wrongful trading – if the directors of a company continue to trade, despite being aware that the company is going out of business
● Fraudulent Trading – a company carrying on its operations with the full intention of deceiving or defrauding creditors or customers
● Breach of Fiduciary Duty – as explained above, a director has a duty to have regard to the interests of the creditors of the Company

Yes. A shareholder simply holds a share in the Company and is not responsible for the day to day running of the Company. A shareholder is not personally liable for the liabilities of a Company. A Director is responsible for the day-to-day running of the Company and can, in certain specific circumstances, be held responsible for the liabilities of a Company.

We require you to confirm in the Information Sheet the whereabouts of the Company’s accounting and other books and records. Usually these are held either online (eg Xero, Quickbooks, etc) or with the Company’s accountants. This is so that the Buyer is aware. You must retain those records so that they are available for any subsequent liquidator of the Company and be prepared to hand over any physical or online records that you have.

Maybe, maybe not. Any creditor owed more than £1,500 is entitled to petition for liquidation but if there are no assets to pay the liquidator, often the petitioning creditor is asked to underwrite the liquidator’s fees which they are often reluctant to do. The Buyer will not attempt to put the Company into liquidation.

No. Simply put, a name will be prohibited if:

● it is a name by which the liquidated company was known at any time in the 12 months before liquidation; or
● the name of the new company is so similar that your customers, suppliers, or professional contacts are likely to assume the businesses are linked or associated

The rules are not so strict regarding using the trading name of an establishment such as the name of a hotel or sandwich bar.

If you are a director of a company, you have both a statutory and common law duty to have regard to the interests of the creditors of the Company. So you must act responsibly and correctly if you are considering taking any cash or other assets from the Company before the sale.

Any assets of the company (such as computer equipment and fixtures & fittings) can be sold or transferred so long as fair value is obtained and either paid for by the creditor against an invoice or offset against another debt owing, such as a director’s loan account.

If the transfer is by way of set-off, it could be challenged as an unfair preference if the company goes into liquidation within 6 months of the transaction and creditors or a liquidator decide to pursue the matter. In that event, you can still contest and attempt to justify the payment, but you may have to repay the cash or return the asset if you do not. It would be inappropriate to pay the shareholder(s) a dividend prior to the sale.

You do not have any responsibility for gathering money owed after the date of the sale.

Your liability under a personal guarantee is unaffected by the sale.

Since the Buyer will not trade the Company after the sale you ought to make all employees redundant prior to the sale. You should advise the employees of the Sale. Employment law is complex, and if you are in any doubt, you should seek independent legal advice.

No – The Buyer will write to all known creditors advising of the sale and that the Company has ceased trading.